Petaluma sees its first major challenge to new mobile home laws

Residents at the Youngstown Mobile Home Park in Petaluma received a thick packet Wednesday afternoon announcing monthly rent increases of over $900 – a rise of more than 100% in many cases.

That evening, Jodi Johnson, who’s lived at Youngstown for four years, rushed to arrange an emergency meeting at the park’s community clubhouse. She was surprised to find it locked but got in through a side entrance and let in the others pooling outside the main doors.

“I’m getting raised by almost $1,000,” one woman vented as she walked in. “I can’t express how much anger is in me.”

“It happened so fast,” another person said.

The room quickly filled with urgent chatter as residents commiserated and compared paperwork.

The move is essentially a test of Petaluma’s new mobile home ordinance, which, among other protections for residents, tightened rent control on the land mobile homeowners lease beneath their residences.

Under mobile home laws, a rent hike in such excess of regulations triggers an arbitration, a process facilitated by the city where a park owner makes a case for why permitted rents aren’t enough to allow for their right to a fair return.

Strained by rising rents, inflation and a yearslong pandemic, Sonoma County’s mostly older and low-income mobile home residents have pleaded with cities to strengthen rent control in their parks.

As officials in Santa Rosa, Windsor, Petaluma and most recently Sebastopol have responded, park owners have pushed back, pointing to their own steep and rising costs and warning at public hearings of the potential for arbitration petitions.

Now those words have been put into action.

“Youngstown is a privately owned business, operating without any government subsidies, and is constitutionally guaranteed a reasonable return in order to stay in business,” said Larissa Branes. She’s an attorney for Youngstown MHP LLC, which includes Daniel Weisfield as a co-owner.

She said the city’s ordinance “cannot act as an unconstitutional taking of private property, because all property owners in the U.S. are constitutionally entitled to earn a fair and reasonable return on the capital they invested to buy their property.”

“I was hoping we wouldn't get (arbitration petitions) right out of the gate, but we knew that we might,” Petaluma City Attorney Eric Danly told me Thursday.

“We’re disappointed, but not stunned. I think it's really unfortunate, the impact it's having on the residents. They’re really upset, understandably, and concerned.”

It’s just the latest blow to Youngstown residents since the new law was approved. In the past month, management has announced a conversion of the park from seniors to all ages as well as the potential for shutting down the park completely.

“This is the third thing in four weeks. It’s beyond crazy,” said Johnson, who has led efforts at Youngstown to push for more protections. “I keep trying to research as they come. I don’t know what they’re trying to do.”

Another Petaluma park, Little Woods Mobile Villa, similarly announced a potential closure, and Santa Rosa’s Carriage Court, managed by the same company, Harmony Communities, moved to change its senior designation to all ages earlier this year.

“The consequences thus far that we’re seeing are wide ranging. In the example of Youngstown, they’re throwing everything against the wall,” said Margaret DeMatteo, housing policy attorney for Legal Aid of Sonoma County.

“It’s really a tragedy because these are vulnerable folks. And where are they going to go? ...They’re getting priced out, and this is pretty much the last place they can afford. This is where they intend to live out the rest of their days in a lot of cases.”

To Johnson and other residents, it feels retaliatory.

“We can't let them win,” she said to the group of about 30 in the Youngstown clubhouse Wednesday. “It's not a game. This is our lives. This is your place that you own.”

Mobile home park owners push back

In a conversation last month, Bill Feeney, the owner of another Petaluma mobile home park known as the Cottages told me the characterization of owners as “abusive and heartless people making money hand over fist” is untrue.

He said the proceedings to update the city’s mobile home ordinance were full of misconceptions that led to an over-the-top policy response.

Similar to neighboring jurisdictions, Petaluma’s new rules limit rent increases to 70% of the Consumer Price Index (CPI), the measure of prices for goods and services, with a 4% cap instead of the previous 100% CPI with a 6% cap, which had been in place since 1993.

“With just that one stroke of the pen, they are reducing all mobile home park owner rental income by 30% per annum,” Feeney said.

It’s a big hit to owners contending with aging infrastructure, spiking costs for labor and insurance and constant maintenance of community amenities, he added.

To Feeney, the new rent control restrictions were an overreaction to last year’s unusually high CPI of 6%. It usually hovers much lower, though residents point out that over time, Social Security payments that many rely on have failed to keep pace with even that.

Instead, park owners proposed a rental assistance program for qualifying residents but failed to convince residents and officials.

Under Petaluma’s updated law, the next rent hike will be limited to 2% instead of 2.9% based on June’s CPI.

While Feeney considers rental arbitration the natural response, it’s “a lose-lose situation for everybody,” he said. “A., it's very adversarial, B., it's very expensive and C., it’s very unpredictable.”

Feeney has been part of six, winning increases in half and losing the others.

In the notice to residents, Youngstown’s current ownership, who bought the park in November 2020, laid out its case, saying the park’s rents are below the area average, especially considering the amenities and investment in repairs and maintenance, pegged at more than $134,000 in 2021 and 2022.

“As a family-owned business with little debt service, the original park owner ... maintained rents at an artificially low level,” the packet said. “Because of their unique circumstances, the prior owners of the park did not seek to maximize profits.”

The park’s current rate of return of 4%, the petition continued, is “insufficient to attract investors” and “dooms the park to operate on a shoestring budget, raising the probability that the quality of the park will deteriorate over time and/or that the park will become financially unviable to operate.”

Adding particular strain, owners contend, is a reassessment of the property value that more than doubled taxes.

A reasonable return, their analysis determined, would be 12% to 20%.

Besides other problems Johnson has with the park’s analysis, she noted that long-term leases like hers, which differ from the standard contracts most park residents have, include a clause that allows for the owner to pass on half of the property tax increase.

Residents ready for a fight

Lawyers and experts hired by the residents will make their own case for why the owner’s calculations are flawed or rent increase is unwarranted, and an arbitrator will make the final call.

“Expenses in operating a park so that it’s a safe place for the residents to reside and has appropriate amenities for them do need to be taken into account. That's only fair, because those are real costs in operating a park,” Danly said. “But park owners have some choices about how they structure their financing and capital investments, and not all those necessarily benefit the residents, so those are going to be considerations of the arbitrator.”

Youngstown residents are all too familiar with the process, because it’s not the first time they’ve been through it. Park owners triggered an arbitration in November 2021 when they sought to raise rents by 40%.

Mobile homeowners ultimately prevailed, but the three-month process was taxing, emotionally and financially, due to the cost of hiring legal representation and expert witnesses.

A fund that park owners and residents pay into exists to cover the city’s administrative costs of overseeing the arbitration. At present, the pot is down to $3,000 after the last arbitration, which cost $19,695, and because fee collection was paused during the pandemic.

However, this year’s fees will add another $20,000, and Danly said the city will find additional resources if necessary.

For their part, residents have mobilized quickly.

By Thursday, Johnson told me, they’d started to organize a committee, reached out to local and state representatives and landed some pro bono representation.

“They are trying to scare us, petrify us, make us hopeless,” Johnson said to clapping and calling out from the crowd Wednesday night.

“I don't want you ever to feel hopeless in this situation or not in control because for the first time we are in control. We know what we have to do, we know where we have to head, and if we don't have the answers, we'll find them because we're together in this situation.”

Petaluma’s updated mobile home ordinance, which includes some additional guardrails and clarifications on the arbitration process, goes into effect Aug. 17.

Many eyes will be on this first challenge, which could shape the county’s wave of mobile home laws.

“In Your Corner” is a column that puts watchdog reporting to work for the community. If you have a concern, a tip, or a hunch, you can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On Twitter @InYourCornerTPD and Facebook @InYourCornerTPD.